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Clearwater tries new option to lure businesses downtown: cash

CLEARWATER — They've tried hiring out-of-state consultants to figure out how to revive downtown. They've launched festivals and painting-in-the-park events hoping occasional visitors become regular foot traffic. Former City Council member Jay Polglaze hustled for a good year to entice craft breweries but watched as they settled instead in the vibrant Dunedin core just four miles away.

With vacant storefronts still dominating downtown, city officials are now trying to lure businesses with their most aggressive strategy yet: cash.

Under the Anchor Tenant Incentive Program approved this week, businesses can receive up to $250,000 for renovations, to cover rent, buy furniture and other start-up costs if they locate downtown.

The incentive is targeted for restaurants and brew pubs but is also open to other innovative businesses with potential to be game changers, said Community Redevelopment Agency director Seth Taylor, who designed the program.

"I think what has prevented anchor tenants from locating here is they don't see the people and the activity so they don't feel confident making the investment in downtown," Taylor said. "That's why this program is so important because it gives the extra boost they need to come down here."

Tax refunds and grant incentives are commonly used by states and cities to recruit business and grow the workforce. But Clearwater's Anchor Tenant Incentive is unique in that it doesn't require the recipients create a specific number of jobs, pay a certain wage, use local contractors or meet other benchmarks before receiving the funds.

If the business stays open for five years, the loan will convert into a grant and not be required to be repaid.

Funding will come from the Community Redevelopment Agency's $1.6 million opportunity fund, a budget generated in part by tax revenues from properties within the CRA boundaries: roughly Court-Chestnut Streets to the south, Drew-Jones Streets to the north, Clearwater Harbor to the west and Highland Avenue to the east.

Each applicant will be reviewed by staff for its potential and must be approved by the CRA board, which is composed of City Council members.

"This program is not going to last forever," Taylor said. "We're looking to attract around five anchor tenants. With those five anchor tenants, our goal is that it will create enough of a buzz downtown and spark activity to open the door for other businesses and retailers to locate here."

Steven Malanga, senior fellow at the conservative Manhattan Institute for Policy Research, said the effectiveness of incentives to stimulate economic development varies. But if businesses have historically avoided an area, there are most likely broader underlying issues incentives alone won't fix.

"The problem with incentive programs in general as a magnet, if you will, is if businesses aren't going to a certain area, there are usually a whole set of complex reasons why," Malanga said. "Sometimes saying 'here's a little money, come here,' doesn't solve the problem."

Greg LeRoy, executive director of the nonpartisan economic development resource center Good Jobs First, said local economies with one dominant industry or employer typically perform worse than regions "that have lots of players or no dominant player." The Church of Scientology, for example, has its international spiritual headquarters downtown and has acquired dozens of acres of property since it arrived in 1975.

City Hall, city municipal buildings, the library and the county's administrative building and courthouse are also headquartered downtown.

Until a city addresses the core reasons why businesses are not investing in a downtown or why residential developers are not chasing the market, "then it's the cart before the horse," LeRoy said.

"It's kind of a measure of desperation," he said. "When you see programs loosely structured like this, it suggests the local government is just kind of throwing things at the wall."

The incentive program follows the city's recent launch of a $55 million overhaul of the waterfront called Imagine Clearwater, which, within four years, proposes to reshape Coachman Park, launch a green for concerts where there is currently a parking lot, build walkable terraces and paths along the bluff, and create a gateway plaza with water features and event space at the corner of Cleveland Street and Osceola Avenue.

Building on momentum from the Nolen apartment complex, 257 high-end units nearing completion just east of downtown on Cleveland Street, the Imagine Clearwater plan also proposes more residential development to support businesses.

City Council member Bill Jonson acknowledged the incentive program comes with risk — if the business folds before the five-year term, the loan will be reclaimed through a lien or "a personal guarantee," according to the application.

But he said the convergence of recent activity is worth being optimistic about.

"It's been a long journey and it will be a ways to go in the future, but I would say the acceleration is occurring right now and I'd like to push that along," Jonson said.

Taylor said Clear Sky on Cleveland, a sister bistro to the successful Clearwater Beach cafe expected to open soon at 418 Cleveland St., will be the first beneficiary of the incentive. Although renovations of the building are nearly completed, Taylor said funds will be used for the garden space, outdoor furniture and facade improvements "to make their build-out extraordinary."

Taylor said he is in discussion with two other anchor businesses that could be recipients of the incentive but declined to provide details because they are still in negotiations.

When Andrew Buckenham and two friends were scouting for a place to open their Soggy Bottom Brewing Co. last year, they quickly scratched downtown Clearwater off their list when they saw the lack of foot traffic.

They joined the Dunedin brewery scene in April with their opening at 662 Main St. Since, they often sell out of signature beers like their toasted coconut porter faster than they can brew them, Buckenham said.

But had Clearwater's Anchor Tenant Incentive been around when he was scouting venues, Buckenham, 30, said it would have made him reconsider. With Soggy Bottom's start-up costs of $200,000, Buckenham said the incentive could have sealed the deal.

"Consider Clearwater? We probably would have opened there had we been offered that," Buckenham said. "That definitely would have changed the way we looked at things.

Times staff researcher Caryn Baird contributed to this report. Contact Tracey McManus at tmcmanus@tampabay.com or (727) 445-4151. Follow @TroMcManus.

Clearwater tries new option to lure businesses downtown: cash 06/15/17 [Last modified: Wednesday, June 14, 2017 5:39pm]
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